Java Source, Inc., (ISI) buys coffee beans from around the world and roasts, blends, and packages them for resale. Some of IST's coffees are very popular and sell in large volumes, while a few of the newer blends sell in

very low volumes. ISI prices its coffees at manufacturing cost plus a markup of 25%.

For the coming year, IT's budget includes estimated manufacturing overhead cost of $2,200,000. ISI assigns manufacturing overhead to products on the basis of direct labor-hours. The expected direct labor cost

totals $600,000, which represents 50.000 hours of direct labor time.

The expected costs for direct materials and direct labor for one-pound bags of two of the company's coffee products appear below.

165 CASE 1A-4 Alvity-lesed Absorption Cesting and Pricing OH-6 In Source, Inc. (IST) hay cute beans from around the world and rout, blends, and package them for reale. Some of It's colles de very popular and sell in large volume, while a few of the sewer le meille wery low volumes. Sprices its coffeest manufacturing cont plus amp of 25% For the coming year ISIS budget include estimated manufacturing overhead cost of 82,200,000.151 si activered to product on the basis of dimet lubarbour. The expected fint liber cut el 000, which represents 50.000 hours of dit labore The expected stats for direct materials and direct labor for en pound bags of two of the company's coffee products appear below Direct materials.. Direct labor (0.02 hours per bag) Kenya Dark $4.50 $0.34 Viet Select $2.00 $0 34 Strontroller believes that the company's aditional conting system may be providing milening cent information. To determine whether or not this incorrect, the controller has prepared an analysis of the year expected multing valcoh, shown in the following table: Expected Activity for the Year Activity Cost Pool Purchasing Material handling Qually control Roasting Blending Packaging Total manufacturing overhead cout Activity Measure Purchase orders Number of soupe Number of batches Roasting hours Blending hours Packaging hours 2.000 onders 1.000 sus 500 batches 95.000 Fasting hours 32.000 blending hours 24,000 packaging hours Expected Cont for the Year $ 560,000 193.000 00,000 1.045.000 199,000 120,000 $2.200.000 Despected relation of Kenya Dark and Select coffee were Viet Select Expected sales Datch Bas Purchase orders Honing lime per 100 pounds landing per 100 pound Kerry Dark 10.000 pound 5,000 pounds 2 por both 20.000 pounds 15 fasting hours OS 4.000 pounds 600 pound 2 per la 500 pounds 15 rosong os bending how We per og 13 23 166 + ISI'Stroller believes that the company's traditional costing system may be providing misleading information. The determine whether or not this is correct, the controller has prepared as analysis of the year's expected matching overhead costs, as shown in the following tables Activity Cost Pool Purchasing Material handling Quality control Roasting Blending Packaging Total manufacturing overhead cost Activity Menure Purchase orders Number of setup Number of batches Roasting hours Blending hours Packaging hours Expected Activity for the Year 2,000 orders 1,000 stups 500 batches 95,000 roasting hours 32.000 blending hours 24,000 packaging hours Expected Coat for the Year $ 560,000 193,000 30,000 1.045,000 132.000 120,000 $2,200,000 pape 166 Data regarding the expected production of Kenya Dark und VietSelect coffee were Expected sales Baiche Sehups Purchase order size Roasting time per 100 pounds Blonding time per 100 pounds Packaging time per 100 pounds Kenya Dark 80,000 pounds 5.000 pounds 2 per batch 20.000 pounde 15 roasting hours 05 blending hours 0.3 packaging hours Viet Select 4,000 pounde 500 pounds 2 per batch 500 pounds 15 roasting hours 0.5 blending hours 03 packaging hours Required: 1 Use directors the facturing overhead coat allocan do the follow Die de plantidepredette ved at ut will be wedding the yer Determine the unit product cost of one pound of Kenya Dark coffee and open fiet Select of 2 Uning the stvy bored absorption conting proach, do the following Determine the total nemcsering overed cested Kenya Dakcolle and to Vis Select coffee for the you Using the date developedia become the amount of mencari ve per prendery Dark colle Vie Selected Die de nit product cost of one pound of Kenya Dark coffee and one pod of Viel Select coffee 3. Write a brief meme to the president et St that explain what you find and here and that the pict of ang direct lahor hours as the only covered in CMA a 165 CASE 1A-4 Alvity-lesed Absorption Cesting and Pricing OH-6 In Source, Inc. (IST) hay cute beans from around the world and rout, blends, and package them for reale. Some of It's colles de very popular and sell in large volume, while a few of the sewer le meille wery low volumes. Sprices its coffeest manufacturing cont plus amp of 25% For the coming year ISIS budget include estimated manufacturing overhead cost of 82,200,000.151 si activered to product on the basis of dimet lubarbour. The expected fint liber cut el 000, which represents 50.000 hours of dit labore The expected stats for direct materials and direct labor for en pound bags of two of the company's coffee products appear below Direct materials.. Direct labor (0.02 hours per bag) Kenya Dark $4.50 $0.34 Viet Select $2.00 $0 34 Strontroller believes that the company's aditional conting system may be providing milening cent information. To determine whether or not this incorrect, the controller has prepared an analysis of the year expected multing valcoh, shown in the following table: Expected Activity for the Year Activity Cost Pool Purchasing Material handling Qually control Roasting Blending Packaging Total manufacturing overhead cout Activity Measure Purchase orders Number of soupe Number of batches Roasting hours Blending hours Packaging hours 2.000 onders 1.000 sus 500 batches 95.000 Fasting hours 32.000 blending hours 24,000 packaging hours Expected Cont for the Year $ 560,000 193.000 00,000 1.045.000 199,000 120,000 $2.200.000 Despected relation of Kenya Dark and Select coffee were Viet Select Expected sales Datch Bas Purchase orders Honing lime per 100 pounds landing per 100 pound Kerry Dark 10.000 pound 5,000 pounds 2 por both 20.000 pounds 15 fasting hours OS 4.000 pounds 600 pound 2 per la 500 pounds 15 rosong os bending how We per og 13 23 166 + ISI'Stroller believes that the company's traditional costing system may be providing misleading information. The determine whether or not this is correct, the controller has prepared as analysis of the year's expected matching overhead costs, as shown in the following tables Activity Cost Pool Purchasing Material handling Quality control Roasting Blending Packaging Total manufacturing overhead cost Activity Menure Purchase orders Number of setup Number of batches Roasting hours Blending hours Packaging hours Expected Activity for the Year 2,000 orders 1,000 stups 500 batches 95,000 roasting hours 32.000 blending hours 24,000 packaging hours Expected Coat for the Year $ 560,000 193,000 30,000 1.045,000 132.000 120,000 $2,200,000 pape 166 Data regarding the expected production of Kenya Dark und VietSelect coffee were Expected sales Baiche Sehups Purchase order size Roasting time per 100 pounds Blonding time per 100 pounds Packaging time per 100 pounds Kenya Dark 80,000 pounds 5.000 pounds 2 per batch 20.000 pounde 15 roasting hours 05 blending hours 0.3 packaging hours Viet Select 4,000 pounde 500 pounds 2 per batch 500 pounds 15 roasting hours 0.5 blending hours 03 packaging hours Required: 1 Use directors the facturing overhead coat allocan do the follow Die de plantidepredette ved at ut will be wedding the yer Determine the unit product cost of one pound of Kenya Dark coffee and open fiet Select of 2 Uning the stvy bored absorption conting proach, do the following Determine the total nemcsering overed cested Kenya Dakcolle and to Vis Select coffee for the you Using the date developedia become the amount of mencari ve per prendery Dark colle Vie Selected Die de nit product cost of one pound of Kenya Dark coffee and one pod of Viel Select coffee 3. Write a brief meme to the president et St that explain what you find and here and that the pict of ang direct lahor hours as the only covered in CMA a